ZZZ Identifying and developing CDM Projects in India

Clean Development Mechanism: Identifying and developing CDM Projects in India


1.What is Kyoto Protocol:
a.History and Background UNFCCC
b.What are major sources of GHG
c.Status of the Protocol

2.Kyoto Protocol key element and its relevance to India
3.Flexibility Mechanisms and CDM
4.CDM: How India a developing country can be benefited?
5.Certification Mechanism? Executive Board and Independent Third Party?
6.PCRA’s Strength Areas:
7.GHG Reduction in SMEs through Technology Up gradation
8.Strategy for Technology up gradation: Ph-I , Ph-II & Ph-III
9.Success Stories of PCRA
10.Where PCRA can help

Clean Development Mechanism: Identifying and developing CDM Projects in India


The Kyoto Protocol to the UN Framework Convention on Climate Change may be the most important economic & environment related agreement penned in the 20th century. While its aims are environmental – to reduce human induced emissions of greenhouse gases – achieving those aims will mean changing the fundamental bases of production and consumption, transport, investment and energy provision in signatory countries.
In India we must realize that other countries will have to follow suit. So, we have to start listing what conditions we want to put for our acceptance to the protocol.

The Kyoto Protocol is an international agreement by industrialized countries and those in transition to market economy (these are mainly in Eastern Europe) to reduce their greenhouse gas (GHG) emissions by 5.2% below 1990 levels by 2008-2012. Developing countries can be the signatories to the protocol, but they do not have any binding emission targets.

The Kyoto Protocol established three flexibility mechanisms to assist parties in meeting their targets: Emission Trading (Article 17), Joint Implementation (Article 6), and Clean Development Mechanism (CDM) (Article 12). While Emission Trading and Joint Implementation involve Annex-I parties i.e. parties, which have committed to cutting GHG emissions, CDM requires the participation of developing countries, like India. The CDM is a joint programme between a donor country with a commitment (a developed country) and a host country without a commitment (a developing country). Under Article 12, projects must generate “Certified Emission Reductions” (CERs) which the donor country can use to achieve its emission commitment. The CDM will be supervised by an Executive Board. CERs will be certified by “operational entities” if they deliver “ real, measurable and long term benefits related to the mitigation of climate change and reductions in emissions that are additional to any that would occur in the absence of the certified project activity.” Article 12 allows developed countries to use CERs generated from the year 2000 up to 2008-2012 commitment period to achieve their emission commitment for that commitment period.

The CDM appears to be an attractive concept to both developed and developing countries. Developed countries are provided with an opportunity to achieve their commitments more cost-effectively, while developing countries can be helped to achieve their developmental and environmental goals through investment in “Clean Development” which they might otherwise not be able to afford.

Do we accept CDM proposals as and when they come? For India we can identify certain critical criteria for CDM acceptance like:

The projects should be joint ventures and indigenisation should be promoted over a period of time.
The best and most appropriate technology available should be transferred via CDM and India shouldn’t become the dumping yard for old and obsolete technologies.
The projects should be non-commercial.
There should be no new local, environmental and social impacts.
Small and Medium Enterprises will have to be the first priority under CDM. The concept should, however go to other areas like urban planning and rural development strategies including agricultural practices.

India has a land area of 328 million Hectors (seventh largest in the world) and a population of over a billion people (second largest in the world) growing at 1.9% per year. Industrial growth exceeds 9% annually.
Agriculture -- 67% of the labor force and provides 25% of the GDP.
Industry 15% of the labor force and provide 30% of GDP.
Service sector employs 15% of the labor force and provides 35% of the GDP.

Energy is a key input for all these sectors. As per one rough estimate, the total energy-related emissions of CO2, CH4 and N2O in India in 1990 amounted to about 693 Tg CO2 -equivalents, of which 40% were from the power sector. There are as yet no official figures about India’s greenhouse gas emissions. As per one more rough estimate, India’s total emissions of CO2 in 1990 was 164 MtC and this may be projected to rise to 663 in 2020. India with its 16% of global population emits 2.3% of global GHG-emissions which amounts to negligible emissions at a per capita level. However, we cannot remain complacent, as  in many of the activities; utilization of energy is not efficient in comparison with the international standards and practices and there is a great scope for improvement.

In India, with the high rate of growth in population and increasing developmental needs, the demand for primary energy has spiraled.  This is accompanied by a shift to and increases in the share of commercial energy against the total energy demand. The share of commercial energy against the total energy demand has grown up from much faster in the last decade and is expected to grow further Presently the share of oil and gas in the commercial energy mix is over 40%.

Conservation Potential in petroleum products usage:

Sector Conservation potential in petroleum products usage
Transport 20% --50
Domestic 20% --15
Industrial 25% --15
Agriculture 30% --05
Commercial 35% --15

Conservation Potential in various segments of industries:

Industry Potential Reduction in Energy use
Metals 20-45%
Chemicals 25-40%
Petroleum 30-45%
Cement 10-50%
Food 25-45%
Glass 30-40%
Source:  FICCI 2002

In 1973, after a sharp increase in International oil prices, like other oil importing countries, India suddenly found itself engulfed in a situation of energy crisis.  After the second oil shock of 1979, the problem became even more severe. Even oil importing countries like India are feeling heat because of ongoing US and Allied Forces raid on Iraq. With the ever-increasing oil imports bill, it was realized that increasing dependence on oil had to be checked, every drop of petroleum had to be put to its optimum usage and the possibilities of new oil reserves should be explored. There has been an increasing gap between the total petroleum products demand and domestic crude output.  The self-sufficiency level has dropped down from 63% in 1989-90 to barely 30% in 2000-01 and the demand/supply gap is met through imports resulting in the ever-increasing outflow of precious foreign exchange.

Whenever international oil prices have gone up, governments have introduced energy efficiency policies and also provided enough financial and other resources for energy security & conservation efforts, however success can only be achieved if the attitudinal changes take place in the society as a whole. Even an increase of one US dollar per barrel means an outflow of about Rs. 2000 crores in foreign exchange.  To most of us it would come as a shock that over 25% of the India’s export earnings go for the purchase of oil from the international market.

It is in this backdrop, that Petroleum Conservation Research Association (PCRA) is required to meet the challenges ahead.

As a part of the Government’s response to curb inefficient utilization of oil and to meet the oil crisis of the seventies; a dynamic entity was evolved from the embryo of this necessity. On 6th January 1976, Petroleum Conservation Action Group (PCAG) came into being which on 10th August, 1978, was reconstituted as Petroleum Conservation Research Association (PCRA).  PCRA is a registered society under the Ministry of Petroleum and Natural Gas.  An organization with a purpose, Petroleum Conservation Research Association represents the Government of India’s efforts to promote the conservation of petroleum products by curbing wasteful practices and improving the efficiency of utilization of petroleum products.

Where-ever petroleum products are being used, there’s PCRA promoting the concept of conservation, seeking substitution of oil, persuading oil users to adopt conservation techniques and teaming with the oil users to devise ways to optimize the use of every drop of oil.  PCRA plays the role of a catalyzing agency for achieving petroleum conservation in the major energy intensive sectors of Indian economy viz. industrial, transport, rural, commercial and domestic.

Over the years, new developments have shaped up and given thrust to PCRA’s programmes and activities. In this emerging scenario:

Environmental concerns in the country have led to the introduction of mass emissions norms from 1991. These have been made stringent leading to the adoption of Euro-II & Bharat Stage-II norms and introduction of cleaner fuels for vehicle keeping in mind that transport sector is the biggest consumer of petroleum in India.
Govt. policy as spelt out in India Hydrocarbon Vision-2025 considers issues such as energy security, use of alternate fuels and interchangeability of technology as vital to ensure that mix of energy sources used in economy is optimal and sustainable.
The energy conservation Act enacted in 2001 provides the legal and institutional framework for energy conservation activities.

In its mission for improvement of quality of life, PCRA works with the Public Sector Oil Companies, Govt. & Non-Govt. Organizations, Research Institutes and Labs, Educational Institutions, Consumer Associations and other relevant Organisations.

The activities of PCRA encompass a whole gamut of efforts for promoting and propagating petroleum conservation in India including conduct of energy studies; research & development; creating awareness and educating public on the importance, methods and benefits of conservation and thus working also for Environment Protection through efficient use of energy.

PCRA has made significant achievements in the areas of its operation i.e. industry, transport, rural, commercial and domestic sectors. Its efforts have resulted in substantial savings in foreign exchange, which would have otherwise been spent on oil imports and would have also added to country’s GHG emissions.

Industrial Sector

PCRA programs focus on improvement in fuel efficiency through up gradation of technologies and reducing wastages brought out through energy audits both in big and small-scale industries. Our main focus is efficient technologies for Small Scale Industries because:

Small scale contributes about 40% of India’s total manufacturing sector production

35 % of total exports come from these sectors

Employs 160 lakh workers

There are about 350 SME clusters in the country



Small Scale Industries have great potential for fuel saving because there is a dearth of technical expertise, financial constraints, absence of systematic studies and thus PCRA can play a catalyzing role to bring about technology-up gradation. PCRA’s strategy for technology up gradation involves three phases

Feasibility study - Phase I
Setting up pilot demonstration plant - Phase II
Implementation on a larger scale - Phase III



Phase – I involves:

Studies on status of existing technologies
Identification of  barriers to adoption of efficient technologies

Identification of least cost commercially viable technologies

Assessment  of changes in project specific technological / environmental base lines

Assessment of  costs & payback for each option
Capability assessments


Phase-II involves:

Selecting a region to achieve cluster demonstrative effect

Involving local & apex industry association

Selecting a  unit for up gradation as demonstration project

Inviting service industry to the cluster to form consortium to provide single window solutions

Selecting technology experts in consultation with industry associations
selecting a least cost commercially viable  technology to be a showcase for 50 % - 75% of the industrial units in the cluster

Evolving monitoring & verification system for project parameters


Assessing the project specific technological / environmental  baseline before & after project completion

Dissemination of the benefits of the technology through seminar/ workshops


While Phase-III involves:

Selecting units for project implementation on larger scale.
-Inviting consortiums to form Energy Efficient Companies (EECo.s) & Energy Service Companies (ESCo.s) for offering single window solution to industrial units thereby supporting the sustainability of the technology

Monitoring & verification of the project parameters and comparisons with benefits estimated during feasibility and pilot phase



One of the major difficulties in implementing energy efficiency projects lies in bringing the new technology to the consumers even when the cost is not a barrier. PCRA has experienced that the technical superiority alone of the technology is not sufficient by itself to ensure market success. In fact, “Demonstration” is an essential link between innovation and marketing of the product or technology. A demonstration project is the first use of the equipment or an appliance at full scale, under realistic conditions of its operation and in its socio-economic environment. The demonstration project has to establish technical feasibility, economic and social acceptability. To do so, PCRA involves the designers, the manufacturers and the users of the technology in the final evaluation of the technology at the pilot plant stage. Finally after the demonstration and successful evaluation, the technology is transferred to interested entrepreneurs for commercial production.
-----------------------------------------------------------------------------------------